Dalam Mahkamah Persekutuan Malaysia 02(f)-29!03!2014(w)

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    DALAM MAHKAMAH PERSEKUTUAN MALAYSIA

    (BIDANGKUASA RAYUAN)

    RAYUAN SIVIL NO. 02(f)-29-03/2014(W)

    ANTARA

    1. Merong Mahawangsa Sdn Bhd

    2. DatoYahya bin A. Jalil PERAYU-

    PERAYU

    DAN

    DatoShazryl Eskay bin Abdullah RESPONDEN

    Coram: Richard Malanjum HB Sabah dan Sarawak

    Ahmad Maarop HMPJeffrey Tan HMPApandi Ali HMPAbu Samah Nordin HMP

    JUDGMENT OF THE COURT

    The question upon which leave was granted to appeal

    against the order of the Court of Appeal in respect of the

    matter decided by the High Court in the exercise of its

    original jurisdiction, reads:

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    Whether an agreement to provide services toinfluence the decision of a public decision maker toaward a contract is a contract opposed to public

    policy as defined under section 24(e) of the ContractsAct 1950 and [is] therefore void?

    The background facts could be summarised as

    follows. Evidently, there was a plan by the Government of

    Malaysia for a bridge to replace the Johore-Singapore

    causeway (hereinafter referred to as the bridge project), and

    that the Economic Planning Unit of the Prime Ministers

    Department, by its letter dated 25.6.1998, awarded, in

    principle, the execution of the bridge project to one Suria

    Kalbu Sdn Bhd in which the 2nd Appellant had an equity of

    60%. Hitherto, the Appellants had requested the Respondent

    to render his services to procure and secure the awardof

    the execution of the project from the Government of

    Malaysia, for which services the Appellants had agreed to

    pay RM20 million to the Respondent. Those factsappeared

    in the following letter of undertaking dated 3.7.1998 of the 1st

    Appellant to the Respondent, which was countersigned by the

    Respondent in agreement.

    LETTER OF UNDERTAKING

    To:MR. SHAZRYL ESKAY BIN ABDULLAHI.C. 600216-02-5215

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    22 JALAN BRUASDAMANSARA HEIGHTS50490 KUALA LUMPUR

    WHEREAS the Procuror has at our request agreed torender his services for the purpose of procuring andsecuring from the Government of Malaysia the awardof the project known as Cadangan PembinaanJambatan Menggantikan Tambak Johor secaraPenswastaan (hereinafter referred to as theProject) in favour of the Consortium called SURIAKALBU SDN BHD OF No. 3, Jalan 222, 46000Petaling Jaya (Company Registration No. 452586-U)

    (hereinafter called the Consortium) of which wehave a 60% equity participation in the issued sharecapital.

    WHEREAS through the Procurors services aforesaidthe Unit Perancang Ekonomi Jabatan Perdana Menteriby letter dated 22th June 1998 has awarded inprinciple the project to the consortium.

    In consideration of the services aforesaid rendered bythe Procuror we Merong Mahawangsa Sdn Bhd(Company Registration No. 463227-X) a companyincorporated in Malaysia and having its registeredaddress at No. 3372, Jalan 18/31, Taman SriSerdang, 43300 Seri Kembangan, Selangor DarulEhsan hereby undertakes and agrees to pay you sumof Ringgit Malaysia Twenty Million only(RM20,000,000.00) being the agreed remuneration

    payable on or before 3rdNovember, 1998.

    This undertaking shall remain valid so long as theaward for the project remains valid and subsistingand should the award be withdrawn and orterminated for any reasons whatsoever the aforesaid

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    sum of RM20,000,000.00 or any part thereof shall berefunded without interest immediately.

    Dated this 3rdday of July 1998

    sgd..YAHYA BIN A. JALILPengarah EksekutifMerong Mahawangsa Sdn BHd

    I confirm my agreement tothe Undertaking aforesaid

    sgd..SYAZRYL ESKAY BIN ABDULLAH

    The action by the Respondent was for payment of

    that RM20m by the Appellants. The Respondent pleaded that

    he rendered the following services to the Appellants: (i)

    obtained the tender and secured the bridge project from the

    Government of Malaysia for the benefit and interest of the 1st

    Appellant, (ii) elevated the 2nd Appellants equity in Suria

    Kalbur Sdn Bhd from 20% to 60%, (iii) obtained foreign

    funding to fund the bridge project, and, (iv) used his

    influence and good relationship with the Government of

    Malaysia to procure the original bridge project (SIG project)

    for the benefit and interest of the [1stAppellant](see 22AR).

    The Respondent further pleaded that in consideration of his

    valuable services rendered, the 1stAppellant, through the 2nd

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    Appellant, gave the aforesaid letter of undertaking dated

    3.7.1998, whereby the 1stAppellant undertook to pay RM20m

    to the Respondent by or before 3.11.1998, but failed to

    honour the undertaking.

    The pleaded defence of the 1st Appellant was two

    pronged. First, the 1stAppellant pleaded that the asserted

    procurement of the bridge project on account of the

    Respondents close relationship with the Government of

    Malaysia and DatoSeri Megat Junid was against public policyand that the said letter of undertaking was illegal and void.

    Then again, the 1st Appellant also pleaded that the

    Respondent had not secured any project from the

    Government of Malaysia for the 1st Appellant, that on

    11.8.2003, the bridge project, which was redesigned, was

    awarded to one Gerbang Perdana Sdn Bhd, that on12.4.2006, the Government of Malaysia wholly scrapped the

    bridge project, and that the letter of undertaking could not be

    put into effect as the bridge project had not materialised.

    Suffice it to say that the pleaded defence of the 2ndAppellant

    was not materially different from that of the 1st Appellant.

    The pleaded reply of the Respondent was that the letter of

    undertaking was not contrary to public policy, that the bridge

    project was awarded to Gerbang Perdana Sdn Bhd on account

    of the endeavour of the Respondent, and that the Appellants

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    had directly or indirectly enjoyed the benefit of the

    compensation that was paid pursuant to the cancellation of

    the bridge project.

    There were hardly any agreed facts to speak of when

    trial commenced (see page 237 of the Appeal Record). But

    still much were admitted by both sides. Inter alia, the

    Respondent admitted (see 239 242AR) (i) that on

    11.8.2003, the Public Works Department issued a letter of

    acceptance to Gerbang Perdana Sdn Bhd for the design,construction, completion and commissioning of the

    [redesigned] bridge project for a contract sum of RM1.113

    billion, (ii) that on 5.2.2003, the Public Works Department

    instructed Gerbang Perdana Sdn Bhd to stop work on the

    bridge project, and, (iii) that on 12.4.2006, the Public Works

    Department issued a letter to Gerbang Perdana for [the]mutual termination of the bridge project contract. And inter

    alia, the Appellants admitted (see 243 245AR) (i) that the

    letter of undertaking dated 3.7.1998 was signed by the 2nd

    [Appellant] on behalf of the 1st [Appellant], and, (ii) that

    with respect to the bridge project, a joint venture and

    shareholders agreement dated 11.11.1998 was entered into

    between the 1st Appellant, Diversified Resources Berhad,

    Detik Nagasari Sdn Bhd and Gerbang Perdana Sdn Bhd.

    There were differences in the respective dates, but it was

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    nonetheless common ground that the letter of undertaking

    dated 3.7.1998 was given by the Appellants to the

    Respondent, and that the bridge project was scrapped by the

    Government of Malaysia.

    The trial court held that the main legal issue raised

    [by the Appellants] was whether the consideration was

    opposed to public policy, illegal and therefore unenforceable

    pursuant to section 24(e) of the Contracts Act 1950 (Act),

    which said section 24 of the Act read:

    The consideration or object of an agreement islawful, unless-

    (a)it is forbidden by a law;

    (b) it is of such a nature that, if permitted, it woulddefeat any law;

    (c) it is fraudulent;

    (d) it involves or implies injury to the person orproperty of another; or

    (e) the court regards it as immoral, or opposed topublic policy.

    In each of the above cases, the consideration or

    object of an agreement is said to be unlawful. Everyagreement of which the object or consideration isunlawful is void.

    ILLUSTRATIONS

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    (a) A agrees to sell his house to B for RM10,000.Here, B's promise to pay the sum of RM10,000 isthe consideration for A's promise to sell thehouse, and A's promise to sell the house is the

    consideration for B's promise to pay theRM10,000. These are lawful considerations.

    (b) A promises to pay B RM1,000 at the end of sixmonths, if C, who owes that sum to B, fails to payit. B promises to grant time to C accordingly.Here the promise of each party is theconsideration for the promise of the other party,and they are lawful considerations.

    (c) Apromises, for a certain sum paid to him by B, tomake good to B the value of his ship if it iswre